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Two thirds of advisers fail Which? equity release test

Two thirds of advisers failed to pass all of Which?’s benchmarks for equity release advice in a recent set of mystery shops.

Which? researchers visited 40 advisers and found that only a third of them met all the benchmarks for good advice set by the consumer magazine.

Overall, five out of 12 equity release specialists passed the Which? test from Just Retirement, Key Retirement Solutions, Age Partnership, Home & Capital, Aviva and Prudential.

It also found that eight of the 28 IFAs mystery shopped met the Which? benchmark.

It says 23 advisers tested failed to carry a fact-find and seven didn’t even ask about the researcher’s income. Some advisers didn’t mention how quickly the debt would grow or discuss the effect of compound interest. One IFA said there was no chance of using up all the equity in the customer’s’ home “unless you live to 150”.

Also, almost half of the advisers didn’t mention or dismissed out of hand home reversion plans.

Which? editor Martyn Hocking says: “Which?’s investigation has uncovered some major flaws in the equity release advice process. We’d like to see a tightening up of the advice process.”

KRS group director Dean Mirfin says this research should be a wake-up call to all advisers working in the sector, not just for those singled out. He says: “This is very disappointing, and I am sure my advisers did their jobs correctly, but we will show this to all KRS staff and reminding them how easy it is to do it wrong.

“It’s time we stopped defending the sector as a whole as we hear of advisers giving bad advice all the time. If there are people out there not doing the job as they should, this will hopefully make them take a long, hard look at their proposition and consider leaving equity release. In that sense, this Which? study is of value.”

Safe Homes Income Plans director general Andrea Rozario warns that what has been excluded as well as what has been included needs to be remembered when looking at this research.

She says: “Although there are estimated to be over 7000 people who have taken the specialist equity release exams, the fact that Which? has found issues with the processes of some of the 40 advisers reviewed shows there is absolutely no room for complacency.”

Bridgewater Equity Release compliance and communications Manager Alison Beeston says: “We are surprised at the significant numbers Which? found who are not providing, at the very least, generic information about the products.

“In order for the adviser community to avoid further criticism of this nature, advisers must actively consider the plans in any discussion of equity release.”


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. equity release
    this result is no surprise at all! this area is ticking time bomb!

  2. Equity Release
    Ticking Time Bomb Nonsense. The key to this article is that the advice from specialist appears to be of a higher quality than that from IFAs dabbliing in this market. Once again the direct sales forces are leading the way with robust systems and support for their sales teams and clients. It is not the sales process that needs updating, it is the understanding that this is a niche market and the specialists are best placed to assist clients in it. Contact a specialist company and arrange an introducer agreement, it will provide significant benefits for your business and, more importantly, your clients.

  3. Ian Couling Lifetime Financial Solutions 23rd July 2009 at 1:02 pm

    Specialists Only
    I think this result is to be expected. Too many advisers dabble with Equity Release when as Steven Hulbert says they should make a local alliance with an IFA who specialises and has a robust and comprehensive advice process. A little knowledge has and always will be a dangerous thing! The ticking timebomb is not the products but I regret to say, inexperienced advisers who have a paper qualification but not understanding of how to apply the knowledge in practice.

  4. Norman O'Donnell 23rd July 2009 at 1:23 pm

    Lifetime advice report
    Comments such as a ticking time bomb do nothing but cause fear and scare mongering. As someone who set up an IFA Lifetime business for a Building Society some 4 years ago, these are the sorts of beliefs and comments that I had to overcome. The business,advice and products are right when delivered through the right specialist people.

  5. 2/3 fail fake shopping
    Perhaps a lot of them just knew that it was not a serious enquiry and just wanted to get rid as quick as possible without offending. Taking a full fact find takes a long time and you have to be pretty sure that prospect is genuine before you embark upon the full admin.

  6. Clive Thompson 23rd July 2009 at 7:01 pm

    Well done Which?
    Once again we hear about the work of the salesperson only interested in the “sale”! I’m not surpised by the Which? findings which do nothing help elevate the reputation of the ER industry. A sobering thought is the call from the disgruntled beneficiary (or their lawyer) accusing you of cheating them out of their their inheritance. Dabblers and salespeople beware!

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